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Cascading Medicaid Cuts Hurt the Poor and Burden the States

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Health care for the poor is in trouble and so are the states that are charged with providing an increasing share of it. As federal aid to states from the American Recovery and Reinvestment Act of 2009 is phased out, most states have been forced to curb Medicaid, the federal-state program that provides health care for the poor and disabled. Despite his strong rhetorical support for Medicaid, President Barack Obama's 2012 budget proposes to reduce the federal share of the program by more than $6 billion.

As a national topic of discussion, Medicaid has been shuffled to the back burner by uprisings abroad and the debt crisis at home. Even when the media spotlight shifts to health care, most of the focus is on the continuing debate over the health care reform measure that Obama managed to push through Congress last year. Republicans describe this law as Obamacare, and their campaign against it helped the GOP take over the House last November. Since then, state attorneys general, most of them Republicans, have tied the Affordable Care Act into legal knots. But in the process of doing this they may also have cemented a formula that expands the state share of Medicaid costs.

After Obama signed the health care bill into law, 26 state attorneys general filed suit in federal court challenging its constitutionality. Their main argument was that Congress lacked authority under the commerce clause of the Constitution to regulate "inactivity," which is to say the decisions of some 30 million Americans not to buy health care insurance. Obamacare would require that everyone buy such insurance, with penalties for those who don't -- and subsidies for those who cannot afford it. The administration contends that "inactivity" is in itself a decision -- in this case a decision of the non-insured to obtain relatively expensive treatment in hospital emergency rooms when they become ill.

So far the federal courts have split, with two Democratic-appointed U.S. District judges upholding the law and two Republican-appointed judges voiding all or part of it as unconstitutional. A U.S. District judge in Virginia agreed with the attorneys general that Americans could not constitutionally be required to buy health insurance but left the rest of the law intact. In Florida, Judge Roger Vinson went further. Comparing the health care bill to a "finely crafted watch" in which the other workings cannot function without the mandate requiring purchase of health insurance, Vinson held that the entire law should be invalidated.

This decision, however, was not quite the complete victory it seemed for those trying to nullify Obamacare. In a less-noticed aspect of his ruling, Judge Vinson rejected the argument of the state AGs that an expansion of Medicaid in the Affordable Care Act violates state sovereignty. In fact, no court so far has accepted this line of reasoning, which probably dooms the chances of this argument with the Supreme Court, which eventually will decide the constitutionality of the health care law.

The likely upshot is that if Obamacare survives, with or without the individual mandate, the federal government will be empowered to shift an increasing share of Medicaid costs to states that are, in New York Gov. Andrew Cuomo's words, "functionally bankrupt." With this year's projected federal budget deficit at a record $1.6 trillion, it is unlikely that Washington will take pity on the states no matter which party is in power.

Budgets, more than State of the Union speeches, are the authentic testimony of an administration's priorities. When Ronald Reagan was president, for example, the rhetoric was invariably anti-government, but the actual budgets perpetuated most of the domestic government programs initiated by the New Deal two generations earlier.

President Obama speaks lyrically of government's mission but his budget is more muted. At least Reagan, via the constructive tinkering of a bipartisan commission, managed some constructive changes in Social Security that helped keep the program reasonably solvent for some 40 years. No president since has managed to accomplish any essential restructuring of Social Security or Medicare, the huge entitlement programs that will eventually have to be cut to bring the cascading national debt under control. Nor, for that matter, have the newly empowered House Republicans, who talk the talk but run for the exits at the mention of entitlement reform even when it is put forth by their own budget whiz, Rep. Paul Ryan (R-Wisconsin).

Facing Fiscal Reality

This bipartisan disinclination to face fiscal reality has had a negative impact on health care, especially for the poor. The avowed purpose of the Affordable Care Act was to extend health insurance to some 30 million Americans who are currently without it. Many of these 30 million people are relatively young people who can afford insurance but are gambling that they won't become sick. Many more are individuals or families that have been squeezed by the Great Recession and spend almost all of their income on food, shelter, and clothing.

An undetermined number of these 30 million are among the 53 million people -- more than one in six Americans -- who are on Medicaid. The Medicaid rolls have grown steadily year after year even as state revenues dwindled because of the recession. It is often noted that employment, still not far from 10 percent, is a "lagging indicator" that grows more slowly than the economy as a whole. State revenues, dependent on income and sales taxes, also lag behind the recovery.

As a result, states have had little choice except to pare Medicaid to the bone. In Washington, the debate over health care has been along partisan lines, but in the states newly installed Democratic governors have been as eager as their Republican counterparts to take the knife to Medicaid. In California, where Medicaid is known as Medi-Cal, Gov. Jerry Brown proposes to cut $1.7 billion from the program, reducing in-home care, doctors' visits and some prescription drugs for the 7.7 million people who rely on it. In New York, Gov. Cuomo seeks to close a $2.85 billion gap in Medicaid and has asked for a task force to report to him on ways of doing it by March 1.

Meanwhile, the Obama administration is in cautious retreat on Medicaid. The enhanced costs of Medicaid that the federal government bore during the recession will expire in mid-2011, and states are trying to make up the difference by cutting optional programs such as organ transplants, prescription drugs, mental health services, eyeglasses, dental care and physical therapy.

In a letter to rebellious governors early this month, Health and Human Services (HHS) Secretary Kathleen Sebelius confirmed that states could legally eliminate such optional services. But on Feb. 15 she went further, giving Arizona Gov. Jan Brewer (R) permission to drop 250,000 childless adults entirely from the Medicaid rolls as part of Brewer's effort to eliminate a $1.1 billion budget shortage.

Sebelius's concessions were underscored by the 2012 budget that Obama submitted to Congress. The budget would cut HHS spending for the first time in the agency's 30-year history. It spared doctors, who would otherwise face deep cuts in Medicare repayments next January, by adding $54 billion to freeze doctors' payments through 2013. But it didn't spare Medicaid recipients. Obama's new budget calls for spending $279 billion on Medicaid and the Children's Health Insurance Program, down from $285.4 billion this year. In plain language, this means stripped-down health care coverage for the poor and bigger burdens for the states.

This story originally ran in the State Net Capitol Journal.

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24 Comments

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thewildburro

Could someone please explain to me why the federal government is against charging sales taxes on internet companies? States would regain a lot of lost revenue and wouldn't be in such a crisis (especially rural states) if a blanket sales tax was required of internet companies like Amazon. I don't get it! According to my state legislators, sales tax equity is something supported at the state level. So why aren't they being supported by the feds?

February 22 2011 at 3:21 PM Report abuse rate up rate down Reply
depichu

Currently benefits are not being properly monitored; abuses of the systems abound; such as: 1) students who misbehave in school - many are then classified as having a disability (emotional disability of not being able to control their conduct) and the student/family then receives monthly benefits from social security - thus students cannot behave as if they do, their family looses the extra monthly "check"; thus, the cycle of student misbehavior continues and grows as others find out about this loophole/way to get free money; 2) illegals who have not ever paid into our tax system receive medical and other benefits - freebees for people who, by laws already on our books, have broken our immigration laws, are criminals, and should be deported for being here illegally; instead they are given "freebees" wasting the money of the programs; 3) the con-artists who "pretend" that they are disabled to obtain benefits; 4) fraud by people billing the system who are not doctors or hospitals but who are citizens of other countries - who have tapped into how to bill and cause fraud to our systems and how to get paid for false claims; 5) the programs need better monitoring; when people are reported to be abusing the system, investigators actually need to look at the situations and criminally charge abusers of the programs.

February 22 2011 at 3:11 PM Report abuse +1 rate up rate down Reply
lorisasse

Ok, I am not the president but I do have an idea. First we quit giving money in aid to foreign countries. We use that money to protect our borders. Second we throw ALL ileagals out of our country. Third we eliminate welfare. Our unemployment centers can be employment centers, they can fill the jobs the ileagals left behind. We will have billions of dollars going back into our own country, our borders will be secure. Americans citizens will be working and paying taxes again. How can we go wrong with that?

February 22 2011 at 2:50 PM Report abuse +8 rate up rate down Reply
dwuzze

Don't worry ,,,, more tax breaks for the wealthy will solve that ... it solves everything !!!! It solved the problem of the USA having to be the largest creditor nation to being the largest debtor nation .... see, now we dont have to worry about being top dog

February 22 2011 at 2:48 PM Report abuse rate up rate down Reply
jvansellsr

My question is if the government can't force us to buy health care ins. how can we be forced to buy car ins. Why don't the repubs call foul on the car ins. issue???? Just like the repubs did not cry socialisim when Regan took all the tax breaks from the middle class and gave them to the wealthy. The largest redistribution of wealth in the history of the U.S.A.

February 22 2011 at 1:22 PM Report abuse +5 rate up rate down Reply
jtdancernh

Hey--makes perfect sense--if we have to pay for all that health care for the poor and the elderly, then we may not have enough dough to pay Halliburton and the rest of the war profiteers, and then their top executives might suffer. We can't have that, now, can we?

February 22 2011 at 1:02 PM Report abuse +8 rate up rate down Reply
Karen

The problem of our health is basically our own...individually. Instead of depending on the government to take care of us, we must take care of ourselves. Prevention, it's said cost much less than traditional medicine, plus we save ourselves from the intense suffering and pain that many of us experience. This is the 21st Century, why do we have to hold on to the shirt tails of governments and pharmaceutical companies to stay healthy? It's time we stop and think and then act, by looking to healthier ways to eat and live. They are all around us, just as the unhealthy foods are.

February 22 2011 at 12:42 PM Report abuse +3 rate up rate down Reply
1 reply to Karen's comment
thewildburro

Karen, You need to look outside the box of your apparently lucky life. And I'm not being critical here. There's just a reality check. Some children are born to drug and alcohol addicted parents. Insurance companies DROP people or charge premiums that they can't afford - even on a middle class income. People, including you, grow old, regardless of your level of great diet and exercise. Things happen to people...and if we weren't so constantly involved in wars of our own making...we would have the resources to share. The gap between the absurdly wealthy and the poor grows constantly. That waitress that serves meals at your favorite restaurant? She is likely not insured and likely can't afford it. (So leave a big tip.)

February 22 2011 at 3:32 PM Report abuse +1 rate up rate down Reply
coffey811

Just wait till Obamas' health care plan takes full affect, and the massive cuts of Medicare and Medicaid take root. I do not think people realize just how damaging this bill was, no one admits to reading it, the country was against, and it was barely passed, its 1/3 of our economy, the Government cannot run social security, medicare is bankrupt and the Post Office as well as Amtrak are also failing, what makes people think the government will do a good job with health care? REMEMBER THIS IS 2012 PEOPLE.

February 22 2011 at 11:32 AM Report abuse +10 rate up rate down Reply
1 reply to coffey811's comment
Willow

Oh, wouldn't it be great if the problem was that simple...guess what? It isn't illegal immigrants at the heart of this problem... there are lots and lots of uninsured American citizens, lots and lots of children.

February 22 2011 at 11:49 AM Report abuse -8 rate up rate down Reply
racmd

The reality is the system is broken. Those of you who do not wish to have the Affordable Health Care Act funded...GREAT. So if you have no insurance..and you show up at the emergency room, I, as a physician, and the hospital have the right to refuse to treat you. Simple as that.
Then let the ACLU argue that one in a court.
Americans cannot have it both ways.
The Medicaid system is broken and has been for years. The Medicare system is a joke. Donut holes, pilot holes and other places you can drive half the population through. There is no managed care unless people want to be managed. When ER visits for colds and coughs becomes the primary care physician who pays the bill?
People...read 42 CFR and the Balanced Budget Act... you will find some very interesting reading material about health care in America.

February 22 2011 at 11:09 AM Report abuse +9 rate up rate down Reply
1 reply to racmd's comment
ettu

Why is every other ad on television used to promote running to the doctor for drugs to treat simple, everyday, ailments? We are over medicated, over vaccinated, over docotored every day of our lives. Get a little twinge, run to the doctor. That is what we are told by our gov't, BigPharma, insurance companies, etc., all those who reap the benefits of their propaganda.

February 22 2011 at 12:14 PM Report abuse +11 rate up rate down Reply
rccthatsme

cut illegal aliens from the program... problem solved. NEXT!

February 22 2011 at 11:04 AM Report abuse +13 rate up rate down Reply

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